Advanced Financial Accounting Report: Domain Holdings Analysis

This report provides a comprehensive analysis of Domain Holdings Australia Limited's financial accounting practices, fulfilling the requirements of an Advanced Financial Accounting assignment. It begins by identifying and describing the accounting concepts employed by the company, such as accruals, conservatism, consistency, and the dual aspect concept, supported by examples from their annual report. The report then delves into the changes introduced by the new accounting standard for leases, AASB 16, contrasting it with the previous AASB 117 and discussing the impact on Domain Holdings' financial statements, particularly regarding lease accounting. Finally, the report summarizes the key disclosures made by Domain Holdings concerning its accounting for leases, including transitional provisions and the effects of adopting AASB 16, providing insights into how the company adapted to the new standard and its implications for financial reporting. The analysis highlights the company's adherence to accounting standards and its approach to financial transparency.

Advance Financial Accounting

Contents
Advance Financial Accounting........................................................................................................1
Introduction......................................................................................................................................3
Main body........................................................................................................................................4
Accounting concepts used by the Domain holding Australia limited.........................................4
Changes in the new accounting standard for lease AASB 16.....................................................6
Key disclosure made by Domain holdings Australia Ltd. on AASB 16.....................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Introduction
The AASB is considered to be the Australian government agency that is developed under the act
of Australian securities and investment commission act 2001. There are various functions of
AASB defined under this act which contains developing a conceptual framework to the evaluate
the proposed standards, to contribute in the growth of the single set of the accounting standard
for the worldwide use of the accounting standards so that comparison can be made between the
different entities. The current report is based on the examination of the accounting concepts and
accounting standard which governs the disclosure of the company’s financial statements (Abbott
and Tan‐Kantor, 2018). Domain Holdings Australia limited is taken into consideration for
identifying the changes in the accounting standard and how these impacts the financial
presentation of the corporation are identified. The report also emphasizes the changes that have
been incorporated in the AASB 16. Also, the impact of the AASB 16 on the AASB 117 would be
identified so that they can maximise the performance of the company and complete the
disclosure requirements for the same.

Main body
Accounting concepts used by the Domain holding Australia limited
The accounting concepts are considered to be the platform for every organisation through which
they consider to identify the transaction that occurs in the company and the way it should be
materialised to provide the best financial report to the users of the accounts. Various conceptual
principles are formulated by the accounting standard board. The AASB and the PSASB together
to advance the quality of the fiscal reporting of the companies in Australia have formulated the
accounting concepts for the betterment of the financial result of the companies (AM, et. al.,
2019). Hence this is important for every company that is working in the country to identify the
accounting concepts and apply them in the manner that helps in the formation of the best
accounting disclosure through which the users of the financial report can get the factual and fair
value of the affairs of the company.
Various concepts are specified by the accounting standard which includes,
 Accruals concept
 Conservatism concept
 Consistency concept
 Economic entity concept
 Going concern concept
 Matching concept
 Materiality concept
 Dual aspect concept
Domain holdings Australia Ltd. is unique of the leading real estate media and technology service
organisation that is built for the purpose to advise, inspire and connect the people of the country
with the property-related lifecycle process. The company is dedicated to providing its users with
the best in class accounting requirements so that they can build trust among the users of the
report. It is considered that the company is providing the true and fair value of affairs to the users
through which they can decide for the investment in the company. Hence for this, the required
accounting concept is followed by the company (Bond, Govendir and Wells, 2016).
Through the annual report of the company, this can be concluded that the company is using
various accounting concepts which helps them to maximise the performance and adhere to the

disclosure requirement. This is considered that the company has presented under its notes to
accounts the principles and the policies that they have taken into consideration for formulation of
the financial reports (Bozzolan, et. al., 2016).
The company has identified the dual aspect concept in its accounts to record the transactions in
the financial statement of the company. This can be checked from the firm balance sheet and
income statement that every credit entry that has been made by the company has a significant
debit entry (Davern, et. al., 2019).
Also, the accrual concept is considered to be followed by the company while making the
recognition of the revenue. Here this is seen that the company recognised the revenue based on
the substance of the relevant agreement. The company has identified that the amount that is
disclosed are net of commission, rebates and the discounts through which are considered to be
recognised at the time when they are relied on.
Also, the recognition of the expenses in the financial asset of the company is specified as per the
conservatism approach. The company is considered to be consistent with the accounting policies
that are followed by them as this is seen that through this, they can maximise the disclosure
requirements and can provide the information to the users of the accounts about the consistency
of the report. The operating segment of the company is determined based on the business
activities which includes the classification of the revenue and expense (Hana and Patrik, 2017).
Also, the assets of the company are disclosed by the company at the fair market value which is
considered to be one of the most important principles for the company and which helps in giving
the true disclosure of the accounting data to the users of the report.
For example, this can be seen in the company’s balance sheet for the recognition of the revenue
the company identified the revenue that is generated by the company where the listing services
are provided, where the revenue is recognised over the time when the listing is placed (Handley,
et.al., 2019). Therefore, this can be considered that various accounting concepts are followed by
the company which helps in the formation of the financial report of the company.

Changes in the new accounting standard for lease AASB 16
The new accounting standard on lease is considered to be having a significant impact on the
performance and the recording of the lease contracts in the financial statement. The AASB has
made various changes in the accounting with the lease where they have specified and removes
the distinction between the operating and the financial lease. Hence this is amended that now the
lease would be presented in the balance sheet of the company. this is seen that the new standard
that is formulated by the board applies to all the entities that are working in the country ( Joubert,
et. al., 2017). hence under the new accounting standard, this has been amended that the
obligation of making the future payment under the operating lease arrangement is now removed
and the company does not need to showcase this in the balance sheet of the company. Hence due
to this, the concern has been raised which includes that this does not give the reflection of the
companies true and the fair value of affairs.
The change that is proposed in the AASB 16 helps the company to include the cost of the use of
the leased asset in the balance sheet of the company and the associated benefits that are related to
it. hence this is seen that changes that are made in the AASB 16 help in giving a more accurate
representation of the financial asset of the company where the liabilities and the useful
information of the company are specified in the financial statement of the company (Marşap and
Yanık, 2018).
Some of the other changes that are specified in the accounting standard by the board include that
that new standard will review the outline of the expense. This is seen that rather being a straight-
line rent expense the company would be recognising more expense in the earlier year and less
expense in the later years. The main objective of the AASB 16 is to report the information that is
related to the lease faithfully and provide the foundation for the operators of the financial
statements so that they can ascertain the amount, cash flows and timing arising from the lease
transactions (Pawson, et.al., 2016).
To make the accounting of the lease in the company the recognition and the measurement must
be done at the commencement date of the lease. Also, in addition to the financial reporting
structure, the right for the use of the asset will be considered to be non-current and the lease
liability will diverge between the current and the non-current market. Another change that may
be caused due to the change in the standard includes that nowadays more and more companies
would be including the right of use of the assets on the balance sheet of the company with the

help of which they would be increasing the total asset due to which the company would be
requiring the audited financial statements that are supposed to be lodged by the company.
Through the new standard, this is seen that the now new integration can be made between the
different departments of the business while entering into lease agreements and financial reporting
functions through which better understanding can be made between the companies (Peach and
West, 2017).
Here in the Domain Holdings Australia Ltd., the company has changed the way of identifying
the lease in the company according to the new standard. The company has recognised the right of
the use assets and the corresponding lease liabilities for all the lease with the period of lease of
not more than 12months. Due to change that has been brought in the standard, the accounting
professionals are confused as to how to calculate the amount of lease for the used asset. Hence
due to the changes the firm has not properly completed the assessment of the standard and the
adjustment that is required to be framed for the adoption of AASB 16 (Shields, et. al., 2015).

Key disclosure made by Domain holdings Australia Ltd. on AASB 16
The Domain holding Australia Ltd. in its financial report for the year ending 2017-18, disclosed
that as the new accounting standard has been made applicable for the accounting purpose, the
company would be applying the amended AASB 16 leases from the end of 30 June 2020. The
company in its financial report for the current year is using the same old accounting standard as
this is easier for them to understand. The transition from the old AAS 117 to new AASB 16
would make the company perform a different task to make the changes in financial reporting.
Hence the company has decided to make it applicable from the year 2020 (Sieverding, 2018).
This would enable the company to maximise the performance and identification of the lease in
the financial reports of the company. the company is currently holding the leasehold building &
improvements where they have decided that they would be depreciating and amortising them
currently up to 7 years. The company has accounted that the company would be disclosing all the
facts and events in its financial report where how the lease was accounted in the previous method
would be disclosed by the company. while making the transition this can be considered by the
company that they would be liable to disclose that they have adopted a various practice which
includes, specifying the assessment where they would give that whether the arrangements that
were made by the company was considered to be a lease. How the short-term lease exemptions
were made by the company (Svoboda and Bohušová, 2017). Hence while the transition from the
AASB 117 to AASB 16 the entity would be having a various number of interdependent options
and different expedients to do the accounting. This will bring different effect on the balance
sheet and profit and loss of the company. hence there would be the various impact on the
companies while transitioning from the old standard to the new standard and this would help in
maximising the performance of the company and the disclosure requirements of the company.
certain impacts include that the new leasing would help in capturing the data and performing the
calculations more precisely. Through this, the company’s debt covenants and the credit rating
would change which would give the debt in the balance sheet of the company. the impairment
tests and the tax effect the accounting due to the increase in the assets and the liabilities of the
company. hence the communication that is required to be made to the stakeholders and the
management that are required to be made for this purpose helps in the formulation of the
financial statement that is disclosing the effect of the transitioning from the AASB 117 to AASB
16 (Xu, et. al., 2017).

Conclusion
This can be concluded that Accounting concepts are the key base of the company’s financial
reporting and analysis. This is important for the companies that are operating in the country to
apply and consider the accounting concepts in the formation of the financial report so that they
are able to maximise the performance and are able to disclose the results which are comparable
with another enterprise so that effective decision for making the investment in the company can
be taken. The AASB has brought various changes in the AASB 16 lease, where they have
decided to make the changes for the better disclosure requirement. The AASB 16 helps in better
calculation of the Accounting transactions that are related to lease and hence through this the
company can maximise their performance. Also, one of the most important facts that are related
to this includes the transitioning effect that the company must take into consideration to make the
changes in the accounting disclosure.

References
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